Thursday, October 12, 2017

On September 26,
2017, the FCC adopted the Twentieth Wireless Competition Report, which found that
the market for mobile wireless broadband is effectively competitive.
Commissioner Mignon Clyburn issued a dissenting statement in which she claimed
that the Report manipulated data to support the narrative that the Open Internet Order decreased investment.
She also said that the Report did not include investment data that she specifically
requested. Nevertheless, when considering the data Commissioner Clyburn cites
in her dissenting statement, the evidence is clear that the Open Internet Order discouraged wireless
providers from investing in broadband networks.

In her dissenting
statement, Commissioner Clyburn said:

For one, the discussion of
investment in the mobile wireless services industry is fundamentally flawed. By
highlighting a decrease in investment between 2015 and 2016, this section was
clearly written to support the false narrative that the 2015 Open Internet
Order deterred wireless carriers from investing in their networks. Despite my
office’s request, this Report does not include data from the 19th, 18th, and
16th Competition Reports, which showed investment from all commercial wireless
companies declined from $33.1 billion in 2013 to $30.9 billion in 2015. In case
you missed it, those reports predated the 2015 Order.

According to CTIA’s data, wireless
investment grew substantially from $20.4 billion in 2009 to $33.1 billion in
2013. Commissioner Clyburn is correct; wireless investment dropped from $33.1
billion in 2013 to $32.1 billion in 2014. But keep in mind, the FCC’s Open Internet proceeding began in early
2014. In May 2014, the FCC adopted a Notice of Proposed
Rulemaking
inviting comments on bright line rules and the possible imposition of Title II
regulation. And in November 2014, President Obama encouraged the FCC to
reclassify broadband under Title II of the Communications Act.

Therefore, the
writing was on the wall throughout most of 2014 that the FCC would impose some
type of more stringent Internet regulation than the regulations then in place.
The regulatory uncertainty hovering over broadband Internet service providers
during this time discouraged them from investing in network infrastructure.

Also, Commissioner
Clyburn undermines her argument when she says “investment
from all commercial wireless companies declined from $33.1 billion in 2013 to
$30.9 billion in 2015.” The Open Internet
Order was adopted in February 2015 but investment data includes all of
2015, meaning wireless providers had almost a full year to decrease their planned
investments due to the impending regulatory costs imposed by the Order. When
you consider the regulatory uncertainty of 2014, along with the imposition of
Title II regulation in early 2015, it is no surprise that wireless providers
decreased investment by $2.2 billion from the end of 2013 to the end of 2015.
(As you can see in the graph below, CTIA’s data shows a decline of $1.2 billion
over this same period.)

As I stated in a May 2017 blog, overall broadband
capital investment has declined by $5.6 billion since the adoption of the Open Internet Order. And as we
illustrate in this infographic, the steep
decline in wireless broadband investment is consistent with the adoption of the
Open Internet Order, dropping by $6.7
billion from 2013 to 2016.

The data that
Commissioner Clyburn requested to be included in the Twentieth Wireless Competition Report provides no evidence that the
imposition of Title II regulation has not harmed broadband investment. The
Commission will recognize the negative investment impact of Internet regulation
when it considers Chairman Pai’s Restoring
Internet Freedom proposal to return to a light-touch regulatory framework.